Tag Archives: Statement of Work

There is only one show currently on television that shows the redevelopment world in anything remotely resembling a realistic light: First Time Flippers. And I can’t watch that show because it just seems cruel to let folks make the mistakes they do. Worse it is just wrong to inflict those mistakes on their future buyers.

The rest of the shows present a remarkably rosy picture of the process. So, I decided to compile a list of the most egregious misconceptions these shows propagate.

All you have to do is buy a house off the MLS.

You see this on Flip or Flop all the time. They rush to buy a house that “just came on the market” or that a “Realtor® friend just told me about.” We even buy the occasional house from a Realtor’s MLS listing.

While it is true that more than 80% of the houses sold in the US are sold via the MLS, that’s only part of the story. When you’re looking for a house to redevelop, you’re not looking for just any house. You need one that you can buy cheap enough that you can afford to hold it through the development, spend the money you need to fix it up, and still make money when you sell it.

The MLS is primarily for retail buyers. As a redeveloper, you can’t pay retail and survive. That’s why I know several people who spend more than $10,000 each month on marketing. You don’t have to spend that much unless you want to operate on a volume, but you will have to spend something.

That said, you almost always want to list your finished home for sale or rent on the MLS for exactly the same reasons you won’t buy listed homes very often. The MLS is for retail buyers, which is exactly who you want to buy your finished project. The only time you wouldn’t want to list the finished project is when you have a purchase offer before you finish.

I first learned about statements of work—or scopes of work, as some people call them—when I worked for one of the multinational computer manufacturers in Texas. Except they called them SoWs, and I wondered what we were doing with pigs. You can take the boy out of the country….

A statement of work, which I will breakdown and call a SoW from here on, is a document that details your expectations from your employees or contractors for a project. The more detailed, the better. We’ve learned the hard way that contractors will exploit any ambiguity to their own advantage, regardless of which side of the project pyramid it’s on.